Millions of customers across Europe are placing their money with challenger banks over traditional financial institutions According to The New York Times favorable regulations in the region and a rise in investor funding have helped boost business for mobile banking companies like Monzo a British startup that offers checking accounts and ATM cards without a physical branch Instead all transactions are done through its app Last year Monzo became one of the first challenger banks to receive a license allowing it to hold customers deposits on its own something no startup in the United States has achieved so far Our regulator is pretty forward-thinking said Tom Blomfield the co-founder and chief executive of Monzo referring to Britain In fact UK authorities have introduced policies such as a regulatory sandbox which allows challenger banks to test new financial products and receive feedback from regulators before releasing them to the public This type of support has helped more mobile banks enter the market throughout the region as well as create a new experience for an increasingly cashless society For example in the future customers wont need to visit branches because they can simply text a customer service representative That lack of retail space as well as tellers will enable these firms to keep costs down which will lead to lower fees The internet lets you run these traditional businesses at a fraction of the cost Blomfield said However like most of these startups Monzo still needs to figure out how to turn a profit Last year its losses quadrupled to 331 million While it generates some income from overdraft and ATM charges Monzo is developing a marketplace where customers can shop for financial services offered by other firms with Monzo collecting a fee It might also start offering short-term loans of up to 1 000 Sources also reported that Monzo plans to raise about 100 million at a valuation of more than 1 billion later on this year and will use the funds to enter into the US But dont count traditional banks out just yet Many big names are adapting to the competition including JPMorgan who is testing a mobile-focused banking service called Finn and Goldman Sachs which has launched Marcus an online savings and lending product with more than 15 million customers